How Much Will Nike Add From NFL Sales?

April 03, 2012

Nike (NYSE:NKE) launched its five-year licensing deal with the National Football League by unveiling its team uniforms on Tuesday. The athletics apparel manufacturer took over the NFL clothing license from Adidas’s Reebok at the start of this month and has since been working hard on marketing. Industry analyst Chris Svezia told Bloomberg that the deal may add $500 million in annual revenue for Nike while also giving the brand more exposure.

Nike, the worlds’ largest sporting goods manufacturer, generated $23.4 billion in sales in the 12 months through February. North American revenue rose 17 percent to $2.15 billion in the quarter ended February 29.

The new jerseys will start at $100, while Reebok’s had a base cost of $85. The higher price and the fact that fans have been waiting to buy the new products may double jersey sales.

“A lot of fans have been holding off on buying a brand that was going to be on the outs, so we’re going to see a very frenetic pace in Nike sales as soon as we roll them out,” Brian Swallow of Fanatics LLC, the official online seller for the NFL and the largest retailer of licensed team sports merchandise in the country, told Bloomberg. “When you blend all the Nike products together, I think we would be disappointed with anything less than a 30 to 40 percent increase in overall sales.” Nike’s popularity in the college sports arena is also likely to help boost sales, Swallow said.

Nike stayed away from design experiments, sticking to a more traditional look for all teams. The Seattle Seahawks, owned by Microsoft (NASDAQ:MSFT) co-founder Paul Allen, was the only team that wanted a design change. Its new kit is deep blue with silver numbers and shoulder stripes. The Denver Broncos changed colors to orange from navy.

Nike shares have gained 14 percent this year through Tuesday’s close.

To contact the reporter on this story: Aabha Rathee at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com